Factory having Andhra Pradesh and corporate office having in Chennai. We are paying service tax along with monthly office rent to ST registered vendor. We are taking service tax portion as a input tax and adjusting with excise liability. Recently Excise department observed and not eligible for input tax due to office rent is not relevant to product manufacturing.
We not providing any service related activities. we are only product manufacturing only. This service tax portion also not revenue expenditure. In this case can I get refund or Can I accumulated in ER1 return.?. Kindly suggest further how can I proceed.
Manufacturing company disputes Excise Department's stance on service tax credit for office rent under Cenvat Credit rules. A manufacturing company with a factory in Andhra Pradesh and a corporate office in Chennai is facing an issue with the Excise Department regarding the eligibility of service tax paid on office rent as input tax credit. The department argues that the rent is not related to product manufacturing, thus not eligible for input tax credit. Various forum participants discuss the applicability of Cenvat Credit rules, with some suggesting that the rent is indirectly related to manufacturing activities and could be justified as input service. Others note the department's pro-revenue stance, emphasizing the need for clear justification of the service's nexus to manufacturing. (AI Summary)
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